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September 22, 2010 to the MEMBERS of the UNITED September 22, 2010 TO THE MEMBERS OF THE UNITED STATES SENATE: Re: Schumer – Van Hollen Campaign-Finance Bill We write about the Schumer – Van Hollen campaign-finance bill, also known as the DISCLOSE Act, S. 3628, which Sen. Majority Leader Reid may attempt to take up this week. This legislation suffers from all of the problems raised below, and should not be mistaken for true campaign finance reform. Unequal treatment of speakers. The DISCLOSE Act’s supporters do not deny that, to the extent the bill favored union speech over corporate speech, it would seriously depart from past campaign-finance legislation and would be unconstitutionally discriminatory. They claim, however, that the bill treats corporate and union speech evenhandedly. That is incorrect. As an initial matter, the bill contains several provisions that expressly target corporate speech while exempting the same type of speech when it emanates from unions. These include a blanket prohibition on election-related speech by many government contractors, by TARP reci- pients (mostly small banks), and by domestic corporations that are minority-owned by foreign citizens (§§ 101, 102). These one-sided restrictions mean that if there were a significant political issue on which a covered company and its union disagreed, the union could speak about the mat- ter unfettered, while the company would operate under the burdens of Schumer – Van Hollen. To be sure, unions rarely hold government contracts, but they are heavily dependent on the gov- ernment in other ways, including through federal grants, collective bargaining agreements, and spending programs like Davis–Bacon. There are now more union members employed by the public sector than by the private sector (Steven Greenhouse, Most U.S. Union Members Are Working for the Government, New Data Shows, N.Y. TIMES, Jan. 22, 2010), and union LM-2 forms show that many unions spend a substantial portion of their funds on lobbying and cam- paign expenditures. Unions’ interests in who government leaders are, and what policies they pursue, are at least as great as corporations’, yet Schumer – Van Hollen leaves them essentially untouched. Provisions of the bill that purportedly apply evenhandedly—such as the disclosure and disclaimer requirements (§§ 211, 214)—would also burden corporations while leaving unions largely unaffected. For example, the bill requires reporting of donations above $600. § 211(a). Because an average union member pays annual dues beneath that threshold—the average dues of the fifteen largest U.S. labor unions were $377 in 2004 (see Mark Brenner, Give Your Union a Dues Checkup, May 27, 2007, http://www.labornotes.org/node/908)—unions would seldom be required to disclose donors’ identities.Union donors would also routinely be exempted from the “stand by your ad” requirements, due to a $10,000 threshold added by the House. § 214. It is estimated that these new on-air disclaimers would take up to half of a 30-second ad—making it too costly for many to speak. It is provisions such as these that Senator Schumer and others have said will not merely disclose corporate speech but will “deter[ ]” it. Remarks by Senator Schu- mer at Press Conference Announcing Campaign Finance Bill (Feb. 11, 2010). Unions are among the most active participants in the political process. They spent more than $450 million in the 2008 elections, will spend more than $150 million this Fall, account for 40% of the campaign-related spending so far this year (corporations account for less than 15%), and recently spent $10 million in Arkansas attempting to defeat a single Senator. See, e.g., T.W. Farnam, Unions Outspending Corporations on Campaign Ads Despite Court Ruling, WASH. POST, July 7, 2010. Any bona fide attempt at campaign-finance reform would address unions and corporations equally, as campaign-finance legislation has in the past. Schumer – Van Hollen does not. Speaker Pelosi and the President have praised the bill’s regulation of corporate speech while omitting reference to purported effects on unions. Statement by the President on the DISCLOSE Act (“[T]his legislation will shine an unprecedented light on corporate spending in political campaigns.”); Pelosi Statement on Passage of DISCLOSE Act by House Administration Committee (“This bill requires corporations to stand by their ads in the same way candidates do[.]”). The bill’s discriminatory approach is further reflected in the special last-minute exemp- tion for the National Rifle Association (§ 211(c)). Added to secure the NRA’s support for the bill in the House, the exemption was expanded in response to widespread criticism to include a small number of additional groups, including the Sierra Club. Thus, the NRA would be able to engage in election-related speech unencumbered by the bill’s new requirements, whereas the Brady Campaign or other gun-control—or pro gun-ownership—groups would be saddled with the bill’s requirements. This Nation’s voters understand that a bill loaded with special favors for powerful lobbying interests is not true campaign-finance reform. It is a bad bill designed to at- tract a majority by advantaging some groups at the expense of others. Partisan nature of the legislation. Supporters of the legislation claim that it is biparti- san, but in fact it is an incumbent-protection shield for members of one party. In the House de- bate, Representative Henry Johnson of Georgia said that if the bill were not passed “we’ll see more Republicans getting elected, [] local, State, and Federal.” Senator Schumer has expressed urgency for enacting the bill in time to affect the 2010 elections. CQ Financial Transcripts, Se- nate Democrats Hold News Conference on Corporate and Labor Spending in Elections, Apr. 29, 2010. Representative Van Hollen has posted on his website an article stating that “congressional Democrats are . anxious” to shut down corporate participation “as much as they . can . as fast as they can” in the 2010 elections. David S. Broder, Congress Prepares for a Battle over Campaign Finance, WASH. POST, Jan. 31, 2010, at A21. Differences from McCain–Feingold. The bill stands in stark contrast to the Bipartisan Campaign Reform Act of 2002 (commonly known as McCain–Feingold or BCRA). BCRA was the culmination of extensive, patient deliberation and bipartisan cooperation. Four years of con- gressional research and debate occurred between the Senate Committee on Governmental Af- fairs’ report in 1998 recommending comprehensive campaign-finance reform, and the 2002 enactment of McCain–Feingold. The bill had bipartisan support in the House and Senate and was signed by a Republican president. By contrast, the DISCLOSE Act has no Republican Se- nate co-sponsors, one of only two Republican co-sponsors voted against the bill in the House, and the bill is being rushed through Congress to influence the fall elections. 2 The bill is not a bona fide response to Citizens United. The bill is being characterized as a response to the Supreme Court’s decision in Citizens United v. FEC. That is incorrect, in part for reasons already addressed. In addition, the bill would enlarge the pre-Citizens United period in which “electioneering communications” are required to be paid for by a PAC and expand the pre-Citizens United definition of “independent expenditure,” thereby adding burdens on corpo- rate speech that did not exist prior to Citizens United. Citizens United has not created such a dire threat that emergency, ill-considered legisla- tion must be enacted now. Approximately half the States allow unlimited corporate independent expenditures in elections. Moreover, the bill will have no practical effect on spending by unions, who are among the most zealous participants in the political process. “The Citizens United case has taken the lid off, and so we can use our soft money for express advocacy directly,” the politi- cal director for AFSCME has said. Eliza Newlin Carney, Labor’s Uphill Climb This Year, NAT’L J. MAG., June 26, 2010. The aim of the Schumer – Van Hollen bill is to enable unions to engage in this political activity unfettered in the fall elections, while silencing other, often con- tradictory, voices in the debate. Some supporters of the bill have argued that without the Schumer – Van Hollen bill, new- ly formed anonymous front organizations would be able to run election-related advertisements without disclosing who funds them. In fact, however, the Act reaches far more broadly. It would severely undercut the ability of longstanding, well-known organizations like the under- signed groups to engage in election-related speech. And its provisions could require the CEO of a company that gave general-treasury funds to a business association, with no intention of in- fluencing an election, to nonetheless appear on television and make an on-air disclaimer. Constitutionality. The constitutional problems presented by Schumer – Van Hollen are profound. It is elementary that speakers should not be subject to different treatment by the gov- ernment based on their identity or the content of their message. First Nat’l Bank v. Bellotti, 435 U.S. 765, 776-77 (1978); Davis v. FEC, 128 S. Ct. 2759, 2774 (2008). Yet this is what Schumer – Van Hollen does. Its blanket prohibition on speech by select groups of corporations, favorit- ism for politically powerful groups like the NRA, and avowed intent to “deter” speech through onerous and time-consuming disclosure requirements all violate basic First Amendment prin- ciples. One of the legislation’s principal sponsors in the House—Representative Capuano—has admitted that he expects portions of the law to be struck down by the courts. Video Transcript of Hearing before the Committee on House Administration, at 1:22:10 (May 6, 2010). Unlike with McCain–Feingold, the bill’s supporters have not even attempted to develop the record to support such far-reaching legislation—nor could they have, given the haste with which they have at- tempted to rush the bill through Congress.
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